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Dean v. Seidel

Summarizing by J. Newman

Mandel v. White Nile Software, et al

Case Type:
Case Status:
20-40026, 20-40340 (5th Circuit, Aug 17,2021) Not Published
The Fifth Circuit affirmed the lower courts' ruling that the Debtor should be denied a discharge generally under 11 USC 727(a)(3) and (4), and denied a discharge as to particular debts owed to a state-court receiver and her counsel under 11 USC 523(a)(2)(A), (4), and (6). A related appeal about the dischargeability of debts owed to other creditors was dismissed for lack of jurisdiction due to the Debtor's failure to file a timely notice of appeal.
Procedural context:
This is the fifth Fifth Circuit opinion arising from an individual Debtor's appeals of adverse rulings in his bankruptcy case and related adversary proceedings, Prior opinions affirmed liability findings against the Debtor, including fraud and breach of fiduciary duty, and monetary awards to multiple creditors. This appeal arose from two district court's decisions affirming the bankruptcy court's determination that the Debtor is not entitled to a discharge under Section 727(a)(3) and (4), and that debts to particular creditors are not dischargeable under Section 523(a)(2)(A), (4), and (6). The debtor filed a timely notice of appeal from only one of the district court's decisions, but sought reversal of both decisions.
The Debtor was sued in state court by a business partner and employee/contractor (jointly "Plaintiffs") involved with him in a business called White Nile. The state court appointed a receiver for White Nile, and the Debtor agreed to pay a percentage of fees incurred by the receiver and her counsel. The Debtor filed his petition for relief on the eve of a state-court hearing to enforce his payment obligation. In litigation before the current appeal, the bankruptcy court found that the Debtor liable for misappropriation of trade secrets, breach of contract, breach of fiduciary duty, fraud, and other claims, and awarded damages to the Debtor's former partner, employee/contractor, and White Nile. The bankruptcy court also awarded attorneys' fees to the state-court receiver and her counsel. Those rulings were affirmed on appeal. The Plaintiffs, White Nile, the receiver, and her counsel sought to have the debts to them, and/or the Debtor's debts generally, declared non-dischargeable under Section 523 and 727. They prevailed in the bankruptcy court, and the bankruptcy court's decision was affirmed by the district court in two seperate opinions. The Debtor filed a timely notice of appeal from the district court's ruling about the dischargeability of the claims asserted by the receiver and her counsel, but did not file a timely notice of appeal from the separate ruling about the dischargeability of claims asserted by the Plaintiffs and White Nile.
Jones, Southwick, Engelhardt (Per Curiam)

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